Press Releases

May 11, 2007

New Offering for USB Flash Drives and Flash Memory Cards Will Give Users and Developers Greater Mobility, More Security and Seamless Integration with Windows-based PCs

REDMOND, Wash. and MILPITAS, Calif. - May 11, 2007 - Microsoft and SanDisk® Corporation (NASDAQ: SNDK) today announced they have signed an agreement to deliver a next-generation software and hardware solution to place application programs and personal customization on USB flash drives and flash memory cards, expanding on and replacing SanDisk's existing U3™ Smart Technology.

Under the terms of the agreement, Microsoft will develop a new software experience and SanDisk will develop new hardware capabilities, including the addition of TrustedFlash™ security technology. SanDisk will incorporate the combined software and hardware solution on removable flash memory cards and Cruzer® USB flash drives. The new offering is expected to be commercially available starting in the second half of 2008.

Effective immediately, Microsoft will engage in discussions with third-party hardware vendors interested in licensing the new software offering. A new entity will be created to license compatible hardware designs, TrustedFlash and other intellectual property from both Microsoft and SanDisk, with revenues to be shared by the two companies.

"SanDisk and U3 forged the category of smart USB devices, elevating simple flash storage to a whole new level of customer benefit," said Will Poole, corporate vice president of Microsoft's Market Expansion Group. "We are excited to work with SanDisk on this next-generation experience, which will allow hardware manufacturers to better differentiate their products and provide an even richer software and services experience for customers."

"The U3 platform was established with the vision of giving customers a consistent and portable computing experience. The existing 20,000 U3 software developers that joined us show the potential for smart flash memory devices," said Yoram Cedar, executive vice president of the mobile business unit and corporate engineering at SanDisk. "We expect this relationship with Microsoft will raise the overall experience for consumers given Microsoft's unique software expertise, and grow the momentum given the large community of 3rd party companies capable of utilizing Microsoft's technologies."

A New Generation of Smart Portable Computing The Microsoft and SanDisk effort will expand on the success of U3, which is surrounded by a large and vibrant ecosystem. Both companies stressed that developers will be offered a migration path to modify existing U3 applications to run on the new offering.

U3 smart drives are the size of a pack of chewing gum or smaller, and let users carry not only files but also popular Windows® software applications with their associated preferences and settings. Consumers simply plug a U3 smart drive into any Windows-based computer's USB port to securely access personalized e-mail programs, Web browsers, productivity tools, multimedia applications and more. When they unplug their U3 smart drive, they take their personal information with them.

The new offering will be designed so that users can carry their personal computing environment - including a customized and familiar user interface, applications and data - on a flash storage device such as a USB flash drive or flash memory card. This computing environment will be accessible on Windows XP and Windows Vista™-based computers with a USB port or flash card reader. Users will be free to work on public or shared computers without fear of leaving personal information behind, and with confidence that their personal information will be encrypted, kept safer from malware, and otherwise protected through security provisions enabled by TrustedFlash technology.

U3 technology was developed by U3 LLC, a joint venture of SanDisk and m-systems, and became available in 2005. SanDisk acquired m-systems in November 2006, and U3 LLC today is a wholly owned subsidiary of SanDisk. SanDisk will continue to actively support the U3 organization and product until the new offering is released to the public next year.

About Microsoft Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

About SanDisk SanDisk is the original inventor of flash storage cards and is the world's largest supplier of flash data storage card products using its patented, high-density flash memory and controller technology. SanDisk is headquartered in Milpitas, CA and has operations worldwide, with more than half its sales outside the U.S.

SanDisk, the SanDisk logo and Cruzer are trademarks of SanDisk Corporation, registered in the United States and other countries. TrustedFlash is a trademark of SanDisk Corporation. U3 is a trademark of U3, LLC. All brand names mentioned herein are for identification purposes only and may be trademarks of their respective holder(s).

This press release contains certain forward-looking statements, including expectations for new product introductions, specifications, applications, markets, pricing, customer acceptance and customers that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate. Risks that may cause these forward-looking statements to be inaccurate include among others: market demand for our products may grow more slowly than our expectations, there may be a slower adoption rate for these products in new markets that we are targeting, our products may not perform as expected, no security technology can be guaranteed to be 100% secure, and the other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, Form 10-K and our quarterly reports on Form 10-Q. We do not intend to update the information contained in this press release.